Businesses that gain a savvy knowledge of Microsoft's volume licensing programmes are in the best position to negotiate the cost of software, according to one analyst.
"Resellers are saying there has never been a better time to negotiate with Microsoft," said Paul DeGroot, an analyst at independent analyst firm Directions on Microsoft. "It is a buyer's market, and it is a time when customers have had unusual bargaining power with Microsoft."
DeGroot also said that the upcoming sale dates announced by Microsoft for both Windows 7 and Office 2010 make it a tactical time to explore different volume licensing options that could help reduce costs over time.
DeGroot is the author of a report released this week entitled ‘Microsoft Volume Licensing Programs’. The report helps users understand what volume licenses they need to buy to save money on software, reduce software management costs, and enforce corporate standards.
The report comes at a time when DeGroot said Microsoft is vulnerable as its customers grapple with budget cuts and the industry trends toward online services.
The extent of that vulnerability may be partially revealed today when Microsoft reports its earnings and may have the first ever year-over-year drop in quarterly revenue. The earnings report also will contain information on the pace of renewals for Microsoft's all-important Enterprise Agreement (EA) volume licensing contracts.
DeGroot said economic factors could force customers to put off renewing EAs, which run for three years and give users licenses for software, most notably Microsoft's two biggest cash cows: Windows and Office.
"Microsoft is vulnerable here," DeGroot said. "EA gives the user a perpetual license and so that means if you don't renew EA nothing happens. You keep using Windows, you keep using Office. Many customers are going to look at that and say 'if I need to chop money out of my software budget, this is the place I can do it and I can have virtually no impact on my operation.'"
It is not uncommon for companies to spend millions of pounds on EA contracts. While letting EA lapse may sound like a no-brainer, DeGroot is quick to qualify his statement as a sign of the economic times. "I don't want to say not renewing your EA is the smartest thing you can do, but right now people are having to make some hard choices," he said.